CMA CGM: Virus Impact Limited as China Activity Resumes
French shipping group CMA CGM said its operations in China were returning to normal after the coronavirus outbreak crippled traffic last month, forecasting the health emergency would have a limited impact on its results this year.
CMA CGM, the world's fourth-largest container shipping firm, expects to return to normal fleet capacity in China from mid-March after seeing signs of industrial production picking up as of late February, it said in a results statement on Friday.
The new coronavirus, which brought parts of China to a standstill before spreading around the world, has led container lines to re-route cargoes and reduce calls to Chinese ports.
Market leader Maersk warned last month that the outbreak would weigh on earnings this year while analysts have been warning of a sharp downturn in global growth, or even recession.
But CMA CGM anticipates that restocking by companies and freight rate increases announced by container lines will support a second-quarter rebound in shipping, Chief Financial Officer Michel Sirat told Reuters.
"We'll have to see if the longer term effects of the coronavirus could have a more structural impact. We don't think that's the case currently so we're confident for 2020," Sirat said by telephone.
The potential financial impact of the virus-related slowdown in China for CMA CGM was thought to be equivalent to 2-3% of 2019 core earnings of around $4 billion, Sirat said, suggesting an impact of around $100 million.
The group posted a net loss of $229 million for 2019, compared with a $34 million profit the previous year, citing the effects of an accounting rule change and the acquisition of loss-making Swiss firm CEVA Logistics.
Its shipping business increased its core operating margin to 5.8% from 4.9%, supported by $1.3 billion in cost savings, CMA CGM said.
(Reporting by Gus Trompiz, Editing by Richard Lough)